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TMI Blog2017 (5) TMI 1637X X X X Extracts X X X X X X X X Extracts X X X X ..... hich is taxable under state agriculture income tax, beyond the purview of Central Income Tax and on the same issue SLP is pending in the case of AFT Industries. 3 That the appellant craves for leave to add, delete or modify any of the grounds of appeal before or at the time of hearing. 3. When the appeal was called for hearing today there was an application for adjournment filed on behalf of the revenue on the ground that Sr.,DR, ITAT Kolkata Benches Mr. Rajat Kureel was transferred to CCIT (CCA) Charge, Delhi by order of CBDT dt 24.04.2017 and therefore the hearing of the appeal may be adjourned. Such request was made in the earlier week also. The revenue has not made any alternate arrangements to represent its case before the Tribunal. In majority of the cases listed for today's hearing similar requests have been made. This bench has granted adjournment wherever issues are contested. In this appeal however, we find that the issue raised by the revenue is no longer res integra and has been decided in several decisions rendered by various benches of the tribunal as well as Hon'ble high courts. In these circumstances, the request for an adjournment was rejected. The ld. Counsel f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ency loan which in turn provides benefit to the parent company i.e. the assessee in the form of increased market share. It was submitted by the assessee that borrowings in the hands of ZAO Classic was External Commercial Borrowing (ECBs) and the range of rates of interest vary between LIBOR plus 100 bps to 200 bps. The European Central Bank has recommended rates ranging from 2.00% to 5.25% on ECBs. Foreign Currency Loans are given by Banks globally bearing LIBOR based Rate. The average of the LIBOR based Rate for the period from 01.4.2007 10 3l.03.2008 was 4.68 %. It has been compared by taking average monthly opening and closing rate for the period from 01.04.2007 to 31.03.2008. The Assessee enclosed a copy of data sourced from Global-rates .com in support of its plea. The assessee pointed out that it had charged 8% on the Loan given to Zao Classic for 01.04.2007 to 31.03.2008 which was higher than the USD Libor Rate. The assessee placed reliance on the decision of Hon'ble ITAT Chennai (2011) 46 SOT 2 (Chennai) (URO)/] 1 taxman. Com 404 (Siva Industries & Holdings Limited vs. The Assistant Commissioner of Income Tax, Company Circle - VI (4), Chennai) wherein it was held that where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Siva Industries and Holdings Ltd vs ACIT, Central Circle-6(1) Chennai 46 SOT 112. In the appellate proceedings the appellant has cited some more decisions such as Four Soft Ltd vs DC IT in ITA No. 1495/Hyd 12010, Cotton Natural (I) Pvt Ltd. vs DCIT in ITA No. 5855/De1/2012. In the case of Siva Industries and Holdings Ltd. (supra), it has been held by the Hon'ble tribunal that once the transaction is between the assessee and the AEs is in foreign currency, the transaction would have to be looked upon by applying commercial principle in regard to international transaction. If this is so, then the domestic prime lending rate would have no applicability and the international rate fixed being LIBOR would come into play. Same view was taken by tribunal in the case of Four Soft Ltd (supra) and some other cases cited by the appellant. Further, it has been held in the decision in the case of Cotton Natural (I) Pvt Ltd. (supra), that financial position and credit rating of the subsidiary would be broadly same as the holding company and LIBOR should be taken as bench-mark without going into aspects like financial health of subsidiary. In one of the cited cases, viz. Aurionpro Sol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come from growing, manufacturing and sale of tea would be Composite income, which means it comprises agricultural income to the extent of growing tea, which is not chargeable to tax and nonagricultural income to the extent it comprises of income from manufacture and sale of tea, which income is chargeable to tax. Rule 8 of the Income Tax Rules, 1962 provides method of computation for composite income from manufacture of tea. Under Rule 8 (1) of the Income Tax Rules, 1962 (Rules) income derived from sale of tea grown and manufactured by the seller in India shall be computed as if it were income derived from business, and forty per cent of such income shall be deemed to be income liable to tax. According to the AO Cess on green leaf was an expenditure which was attributable to the activity of growing of tea and would therefore be not allowable as deduction while computing income from manufacture and sale of tea. The plea of the Assessee was that the entire green leaf cess had to be allowed as deduction first and only on the loss or profit arrived at after such deduction Rule 8(1) of the Rules have to be applied and 40% of such sum has to be considered as income or loss from the busin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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